Bank towers are pictured in the financial district in Toronto. Bank executives signalled confidence in the Canadian economy’s ability to withstand tariff pressures.Andrew Lahodynskyj/The Canadian Press
Three of Canada’s biggest banks posted profits that topped analysts’ expectations and signalled that the country’s economy can withstand tariff upheaval with the United States, bucking concerns over mounting trade and geopolitical uncertainty.
Royal Bank of Canada RY-T, Toronto-Dominion Bank TD-T and Canadian Imperial Bank of Commerce CM-T reported boosts in profit, capping off a week when each of the country’s six biggest banks beat estimates.
RBC chief executive officer Dave McKay said the bank’s clients are continuing to spend and invest, and loan delinquencies have remained manageable.
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While the recently announced U.S. tariffs could dampen Canada’s economic growth, the effective tariff rate on Canada remains low, more than 80 per cent of U.S.-bound exports remain duty-free and Ottawa announced significant support packages to bolster the economy, he added.
“The Canadian economy and labour market have performed well, having already absorbed multiple shocks over the past 18 months,” Mr. McKay said during a conference call with analysts.
CIBC’s chief risk officer Frank Guse said the bank’s clients with the most exposure to tariffs represent less than 1 per cent of the bank’s loan portfolio. While the lender’s impaired losses are slightly above the range CIBC had forecasted at the beginning of the year, that outlook did not include a prolonged trade war or conflict in the Middle East.
But CIBC’s CEO Harry Culham and other top executives said the bank has set aside an appropriate buffer to manage longer lasting economic challenges. The direction of the unemployment rate will be the main driver of the bank’s outlook.
“We recognize that rising trade and geopolitical tensions are having real consequences on the economy. The developments over the past week are a reminder that the path forward will not be linear, and we plan for a range of outcomes,” Mr. Culham said during a conference call.
“Looking ahead, we approach the balance of fiscal 2026 with measured confidence.”
TD’s chief risk officer Ajai Bambawale said the bank has set aside about $500-million in provisions for policy and trade risks, but expects total provisions for credit losses at the end of the year to meet the lower end of its previously forecasted range of 40 to 50 basis points.
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A recent TD report said the Canadian economy could launch an investment “supercycle” if it takes certain steps, including increasing the competitiveness of its tax and regulatory systems. The report estimates that more than $1-trillion could be spent on key projects over the next 10 years and beyond.
TD chief executive officer Raymond Chun spoke of opportunities during a conference call.
“In Canada, trade tensions have not dampened investment opportunities as governments seek to drive new activity,” Mr. Chun said.
RBC, CIBC and TD wrapped up earnings among Canada’s six biggest banks, topping expectations across their largest businesses, including capital markets and wealth management. Earlier in the week, Bank of Montreal, Bank of Nova Scotia and National Bank of Canada released results that beat analysts’ estimates.
RBC’s profit rose 11 per cent to $6-billion, or $4.23 per share, in the three months that ended July 31 compared to the same quarter last year. Adjusted to exclude certain items, the bank said it earned $4.28 per share, topping the $4.07 per share analysts expected, according to data by S&P Capital IQ.
TD’s net income rose 38 per cent to $4.62-billion, or $2.74 per share, from the same quarter last year. Adjusted to exclude certain items, the bank said it earned $2.77 per share, beating the $2.47 per share analysts anticipated.
CIBC earned $2.41-billion in the third quarter, or $2.47 per share, up 15 per cent from the same period last year. Adjusted earnings were $2.65-billion, or $2.73 per share, surpassing the $2.50 per share analysts expected.
RBC’s commercial banking unit posted record profit even as trade and geopolitical uncertainty weighed on business activity, particularly in real estate, supply chain, and consumer sectors within Ontario and British Columbia, Mr. McKay said. But loans edged higher as growth continued in certain sectors, including agriculture, health care and the public sector, as well as real estate, which benefitted from Ontario’s HST rebate program.
Commercial banking earned $936-million, up 12 per cent from a year earlier, driven by higher net interest income and lower provisions. Loan balances grew 4 per cent and deposits rose 9 per cent year over year.
Profit in TD’s U.S. business climbed 41 per cent to $1.07-billion as loans grew in middle market commercial lending and credit cards. The bank said it plans to open 100 new branches in the U.S. by the end of 2028, pending regulatory approval.
TD’s chief financial officer Kelvin Tran said the new sites will be located in the bank’s existing footprint along the country’s east coast.
“Our focus is driving organic growth, and building new branches to acquire new customers is part of that strategy,” Mr. Tran said in an interview.
U.S. regulators and law enforcement levied a cap on assets of US$434-billion that limits TD’s ability to expand its retail operations in the country. To continue growing the business and create space under the asset cap, the lender shrunk its U.S. balance sheet by exiting less profitable portfolios.
“It speaks volumes about the effectiveness of our structural cost reduction program, so as those savings come through, and on top of that, moderation of some governance and control costs, that gives us room to reinvest in the business,” Mr. Tran said.
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CIBC’s Canadian and U.S. commercial banking and wealth management beat analysts’ estimates as loan demand and deposit balances rose.
A key part of CIBC’s growth strategy includes expanding its mass affluent segment – clients or households with more than $100,000 in investable assets.
Over the next five years, the bank plans to double the size of the mass affluent segment, which has $360-billion in assets under management, CIBC’s chief financial officer Rob Sedran said. The segment has grown 10 per cent this year.
CIBC has invested in technology platforms aimed at providing services for those clients. Its wealth advisers are also using artificial intelligence to complete administrative work and spend more time with clients, he said.
“This is a very competitive segment,” Mr. Sedran said in an interview. “You really have to deliver value for money to this segment to make it worthwhile to them.”
With a report from Andrew Willis